Bank of America has identified Estée Lauder Companies (NYSE:EL) as its preferred beauty stock for 2026, highlighting growing confidence in the company’s turnaround efforts alongside a more favorable outlook for the sector.
In a research note maintaining a Buy recommendation, BofA analyst Ashley Wallace said the bank has lifted its price target on the shares to $130 from $120 and added Estée Lauder to its U.S. 1 list of top ideas.
“Estee Lauder is our top pick in beauty for 2026,” BofA said, pointing to the group’s “Beauty Reimagined” strategy and an improving earnings trajectory.
Wallace said the plan is “focused on rebuilding revenues through innovation, higher exposure to faster growth distribution channels and increased consumer focused spend,” and is underpinned by an “$800m-1.0bn cost saving / reinvestment program.”
According to the analyst, the recovery is now being supported by “an improving beauty market backdrop, especially in China and the US,” which together represent around 40% of Estée Lauder’s total revenues, based on BofA estimates.
Looking to the wider industry, the bank expects momentum to build in 2026. In its sector outlook, BofA forecasts “accelerating industry revenue growth to 4.9% in 2026, 2x the growth of 2025,” driven by a rebound in China and continued support from U.S. demand.
BofA said it is “most bullish on the recovery in luxe,” while remaining more guarded on mass-market beauty, citing a “K-shaped” recovery.
The bank also argued that Estée Lauder is “most leveraged to the parts of beauty demand which are improving in 2026,” adding that the company’s cost-saving initiatives should result in “high incremental margin drop through to profit.”